16.67% of GST revenues for your thoughts

The campaign to have the federal government cough up a share of GST revenues for cities got a shot in the arm yesterday, when the mayors of Canada’s 22 largest cities endorsed the plan that David Miller has already been pushing for months. So the proposal isn’t Miller’s baby any more; it’s quickly emerging as a broad consensus. In fact, at the press conference, many other mayors spoke more convincingly on the matter than he did.

Still, kudos to him for getting the ball rolling. There is no doubt that Canadian cities need the money, and that governments in Canada need to arrange a better fiscal deal for municipalities. I just wish the mayors would come clean about how much money they’re asking for, given that they have also adopted the essence of Miller’s campaign slogan: They are asking for “one cent of the GST.” (The mayor of Ottawa, Larry O’Brien, even held up a penny as a camera prop.)

At best, the phrase is meaningless. More likely, it’s deliberately misleading, in order to make the request sound even more reasonable than it already is. Media outlets have, for the most part, swallowed the slogan whole, which leads them, in stories like Wall Street Journal, to write sentences like this:

“Cities are asking Ottawa for one cent of all GST collected, or about $5 billion per year.”

Huh? In fact, one cent of all GST collected equals, ahem, one cent (ie. $0.01, also known as 1¢). When the slogan was first unveiled, I thought Miller was seeking one per cent (1%) of all GST collected. After all, that’s what “one cent” means: it’s one one-hundredth (or 1%) of a dollar. But that’s not correct either.

In fact, what the cities are truly asking for is 16.67% of all GST collected. Here’s the logic behind the slogan: for every dollar you spend, the government collects six cents of GST. The mayors want the feds to hand over one of every six cents it collects, or one-sixth of all GST revenues.

Why am I going on about this? Because just last week I got into an argument with a Miller-friendly Toronto city councillor who was clearly confused by the slogan—he had no idea how much GST money the mayor was asking for. I’m too embarrassed for said councillor to divulge a name. But if members of council still can’t get it straight, I doubt the public can. This is a crucial discussion about the fiscal capacity of cities. A lot more is riding on it than just one cent, and it behooves the mayors to say so.